June 19 (Bloomberg) -- JPMorgan Chase & Co. Chief Executive
Officer Jamie Dimon, who has been criticized by lawmakers for
serving on the board of the Federal Reserve Bank of New York,
said district banks benefit from industry leaders’ input.

“If I had a board, I’d want to hear from a lot of
different types of people,” Dimon said today at a hearing of
the House Financial Services Committee in Washington. “It’d be
funny to be talking about global markets and not have someone
involved in the global markets at the table. It certainly does
not have to be me.”

JPMorgan’s trading loss of more than $2 billion has
rekindled concern that the New York Fed, the company’s principal
regulator, is too cozy with Wall Street. Senator Bernie Sanders,
a Vermont independent, along with Democrats Barbara Boxer of
California and Mark Begich of Alaska, introduced legislation
last month that would remove the industry’s executives from the
12 regional Fed banks’ boards.

Congress created the Fed almost a century ago with public
and private features, including putting three bankers on each of
the district boards along with six other directors who represent
the borrowing public. They play no part in bank supervision.

“The board basically sits around and talks about the
economy,” Dimon said today. “It’s more of an informational,
advisory group.”

The Fed reviews capital plans of the largest U.S. banks,
including JPMorgan, to make sure they can withstand economic
stress and in March approved Dimon’s proposal to increase the
dividend and buy back shares. The company subsequently suspended
the repurchase program.

Fed Bailout

Timothy F. Geithner, now the secretary of the U.S. Treasury
Department, led the New York Fed in 2008 when it bailed out
insurer American International Group Inc. and took on assets
from Bear Stearns Cos. to help JPMorgan buy the investment bank.

The 2010 Dodd-Frank Act ended the practice of banker-directors having a vote in electing regional presidents, a move
that New York Fed President William C. Dudley said in a
September interview that he supported.

Fed Chairman Ben S. Bernanke told the Joint Economic
Committee on June 7 that he would be willing to work with
Congress on a bill that would remove bankers from Fed boards.

“If Congress wants to change it, of course we will” work
with lawmakers, Bernanke said in response to a question from
Sanders. “Congress set this up,” and “we’ve made it into
something useful and valuable,” he said.

Bernanke said the Fed’s duties have been examined carefully
in the aftermath of the credit crisis, including by the
Government Accountability Office, the investigative arm of
Congress.

“There were no actual conflicts of interest” found, he
said. The Fed has “a firewall so that the bankers do not have
any information or ability to influence supervisory decisions.”

To contact the reporters on this story:
Caroline Salas Gage in New York;
Noah Buhayar in New York at
nbuhayar@bloomberg.net